Budget airlines to pay high price for Stansted runway

Low-cost airlines face a 70 per cent rise in landing charges to help to finance the construction of a second runway at Stansted.

The Government is poised to announce that the Essex airport should be the first location for new runway capacity in the congested South-East, with Heathrow possibly following by 2020.

The decision, expected to be published in a White Paper in two weeks, will enrage airlines such as British Airways and Virgin, which will face higher charges at Heathrow and Gatwick to finance expansion at a base they do not use. All three airports are owned by BAA.

But Ryanair and Easyjet, the dominant carriers at Stansted, will also be presented with steep increases when their current discounted deals expire in 2006 and 2007.

Ministers insist that the £4 billion cost of the new runway must be met by the aviation industry, with no taxpayer support.

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At present, Stansted users pay an average charge of £2.89 per passenger. This is likely to rise to the permitted maximum of £4.89, a hike of 69 per cent, and increase sharply again after 2008.

Michael O'Leary, the chief executive of Ryanair, said he saw no reason why the company should have to pay higher fees until the runway opened, probably in 2013.

He said the fact that a second strip would allow Stansted's capacity to rise from 35 million passengers a year to 82 million, larger than the present size of Heathrow, should enable per-head charges to fall.

However, airline analysts believe that the budget airlines will have to accept higher charges - and pass them on to consumers - because they have no alternative but to remain at Stansted. No other South-East airport would have enough spare capacity to accommodate them.

Advisers to Alistair Darling, the Transport Secretary, hope that BA will drop threats of legal action because the opening of Terminal Five at Heathrow in 2008 will allow it to switch more of its operations from short-haul to more profitable long-haul routes.

Mr Darling is expected to say that another runway at Heathrow cannot be built first because local air quality would breach new legal standards required by the European Union from 2010.

Department for Transport officials estimate that 35,000 residents would be exposed to levels of nitrogen dioxide above limits. At Stansted, the figure is reckoned to be between zero and 20.

• Ryanair claimed the title of "Britain's favourite airline" yesterday after its traffic figures for last month indicated that, on short-haul routes, it had carried more passengers than BA for the first time.